Published online by Cambridge University Press: 10 August 2009
A, the country's leading department store, is negotiating with B for B to build a new shopping centre in which A is to rent substantial premises for a new flagship store. During the negotiations, before the contract for A's lease is concluded, B begins the building of the shopping centre, including elements of design and construction which follow the indications which A has given of the layout it will wish to have. A knows that B has begun the building works. When the building work is far advanced, A breaks off negotiations because it has then done a survey of the likely client base, and has decided that a store in that location would not, in fact, be sufficiently profitable. B is left with a shopping centre which he would not have built without a tenant such as A to form the focus for the centre; and he now has a building which is so constructed and organised that he cannot find any alternative department store as the tenant. What liability (in contract, tort, restitution, or any other form of liability), if any, does A have to B?
As mentioned in discussing earlier cases, the freedom to negotiate is a cornerstone of contract law, including the freedom to break off negotiations; but it may collide with the mutual reliance on the honesty of the negotiating parties.